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Compliance Issues in Cryptocurrency in Canada: A Delicate Balance

Canada’s regulatory landscape for cryptocurrencies has been evolving rapidly, striking a balance between encouraging innovation and protecting investors. In recent years, the Canadian Securities Administrators (CSA) has issued several guidance documents and publications to provide clarity on the regulation of cryptocurrency trading platforms (CTPs).

Securities Legislation Applies to Most Crypto Trading Platforms

According to the CSA’s 2020 guidance, most CTPs are subject to securities legislation in Canada. This includes both marketplace platforms, which provide a market for buying and selling crypto assets, and dealer platforms, which trade crypto tokens or contracts and offer custody services to clients.

Compliance Obligations Critical for Crypto Businesses

Cryptocurrency entities must ensure they understand and fulfill their compliance obligations under securities laws. This can be a complex and demanding process, particularly given the fast-moving nature of the industry. Entities are advised to communicate with their securities regulators and seek guidance on their specific circumstances.

Regulatory Relief Available through CSA Sandbox

The CSA Regulatory Sandbox is an initiative that provides exemptive relief for fintech businesses from certain securities laws requirements. This can be a valuable opportunity for cryptocurrency entities looking to innovate and grow. For example, Wealthsimple was granted exemptive relief for its crypto exchange platform in September 2020.

Sia Partners Can Assist with Compliance

Given the complex regulatory environment and significant penalties for non-compliance, working with a compliance expert can add crucial value to your business. Sia Partners has extensive experience in compliance, including former regulators on staff, and is well-equipped to assist cryptocurrency entities with their compliance needs.

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